Recommendations – The importance of consideration
to compete in the next steps
According to a notice on
the website of the Transport Authority and the website of the airline WOW air on the morning of 28 March 2019 has
The airline has ceased operations. In light of this, the Competition Authority wishes to
to forward the following information to the relevant authorities and stakeholders
and the public. At the same time, the Competition Authority issues specific recommendations to
the relevant authorities and those parties who will hold the relevant WOW assets in
continued, see further the conclusion of the notification.
Competition for WOW in
Scheduled flights to and from Iceland have been important
Competition in business is important as it
increases consumer welfare and promotes efficiency in business. This applies to scheduled flights.
to and from Iceland but by its nature, there are air connections with other states
extremely important for Icelandic society. Has experience shown that increased competition
Flights to and from the country lower prices, increase the frequency of journeys and thereby improve
consumer services. Competition in this field is then a fundamental prerequisite.
for the growth and development of tourism in Iceland.
WOW has been
an important competitor in scheduled flights to and from Iceland since the company began
operations in mid-2012 and subsequently took over Iceland Express. When
Iceland Express entered the market in 2003 with flights to Copenhagen and London, lowering prices by up to 30-40%. Upon its arrival
Iceland Express's entry into the market for flights to Boston and New York in 2010 lowered prices.
the price by up to half. Price surveys by independent parties in recent years show that this price competition
held up with the arrival of WOW, both on flights to and from Europe and North America. This
Increased competition has therefore led to significant savings for the Icelandic public.
and companies. In addition, lower prices and increased flight frequency have led to
a significant increase in tourists, as tourism has already become one of the largest
the country's industry.
The disappearance of WOW will soon
Unchanged additional compression
WOW air's share in
The scheduled flight to and from Iceland was 25-30% in 2018 and the share of Icelandair
around 35-40% for passengers. With connecting passengers, WOW's share was 35-40%.
and Icelandair's share 40-45% in the same year. The share of other competitors, i.e.
of foreign airlines, was much smaller and more dispersed. In view of this, it is not necessary
to elaborate on the fact that the departure of WOW from the Icelandic market leaves a considerable void
gap. Compression in flight will therefore increase significantly, at least in the short term.
Importance
WOW's opening hours at airports
Those check-out times (i.e. slots)
Airports that WOW has been able to access can be very important in competition to
and from Iceland. In this regard, it is important to distinguish between airlines.
that fly „from Iceland“ and airlines that fly „to Iceland“. Airlines that
Flying „from Iceland“, they base their schedule on Keflavik Airport being theirs.
home base and flights usually start there in the morning and/or to the airport
is their hub. WOW and Icelandair have been in this category of airlines and
their demand for appointments is therefore high in the mornings and afternoons.
Then Keflavik Airport is crowded. Airlines that fly „to Iceland“ are
however, all foreign airlines that fly between foreign destinations and
of Iceland. The home bases or hubs of these airlines are, by their nature
foreign airports. The companies' decisions on individual destinations, including.
Iceland, can change at short notice, as their commercial interests
not connected to Iceland in the same way as the airlines that operate there
his from here.
Airlines that fly „from
“Icelandic" are important for Icelandic consumers, as their service is not least
tailored to their needs. This means that the processing times that WOW has
both at Keflavik Airport and at other international airports that the company has
The flights are important and valuable for those parties who wish to come in.
the Icelandic market and start flights „from Iceland“, where Keflavik Airport is
home port. These turnaround times are also important for development.
A route network for scheduled flights to and from Iceland, serving passengers in transit.
The Atlantic Ocean. WOW's turnaround times can therefore be a prerequisite for a new member
can begin competitive scheduled flights to and from Keflavik Airport.
Airlines' assets
Despite the fact that
The airline WOW air having now ceased operations, various arrangements may be in place.
value in the company that can subsequently be utilised in the Icelandic aviation market. It is about
deal with, among other things, trademarks, employment contracts, aircraft lease agreements and
various types of licences which, as appropriate, can be maintained for a specified period of time. In
In this context, airport turnaround times are of considerable importance, but this is about
discuss limited quality maintained by operators, as noted above. Thus
is it provided for in the EEA law rules on processing times, which apply, inter alia, in Iceland
that it shall be possible, upon fulfilment of certain conditions, to grant a company which
ceases trading and even enters insolvency proceedings the right to retain
specific rights whilst seeking ways to sell assets to new
of the parties and thereby save valuable assets. One may look to foreign
to condemn in this context.
Forward
has come to WOW air to hand in its operating licence to
Air Navigation Services. The allocation of opening hours at airports is linked to the air operator certificate.
of the relevant airline. It is extremely important that the government considers that
the air operator's certificate or rights related thereto retain their validity in part, and
take further measures to promote the liquidation of the company's assets
the company can utilise the assets inherent in turnaround times at airports and
so that the assets may potentially be used to maintain competition in
air market.
Business
Assets can include mergers
Í
the enforcement of competition law both domestically and in EEA/EU competition law has
it has been considered that the purchase of assets from bankruptcy estates can constitute a merger in
understanding of competition law. Foreign precedents show that attempts are made to ensure that business
Bankruptcies involving the assets of failed airlines must not distort competition.
It is important that, among other things,.
Administrators should bear in mind that competition law can take measures into account.
theirs and they shall endeavour, as far as possible, to take into account
from a competitive perspective.
Recommendations of the Competition Authority
In light of everything
In light of the above, the Competition Authority directs this to the relevant authorities and
Consideration will be given to the parties who will take over the relevant assets of WOW air going forward.
the competitive effects of the decisions to be taken on the resolution
of the matter. The following is recommended:
· That those involved in resolving the matter do what is in
Their power is to ensure that assets do not disappear from the market, but
that possible measures are instead taken to promote competition on
The Icelandic aviation market is to be maintained, as far as is reasonably practicable.
· That the aviation authorities, including coordination controllers at
airports, equipment for it, as far as is reasonably practicable, that assets
airlines, both intangible and tangible, that cease operations can be utilised by new ones
parties in operation. Is this not especially important in Iceland, which by its very nature
is a geographically demarcated market and the economy is based to a considerable extent on
tourism industry.
· That the trustees do everything in their power
is intended to ensure that assets do not disappear from the market and thereby
that competition in the Icelandic aviation market is maintained as far as possible
possible.
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